spanish mortgage collaterals appraisal system:...

SPANISH MORTGAGE COLLATERALS APPRAISAL SYSTEM: METHODOLOGY, REPORTING, APPRAISAL COMPANIES, AND SUPERVISION

Miguel Ángel López GómezBanco de España

Sound collateral valuation and its impact on provisioning for NPLs

International conference

May 15-16, 2018Vienna, Austria

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INFORMATION:

MARKET

PROPERTY

APPRAISER

FACTORS:

•ENVIROMENT

•PURPOSE

•IDIOSYNCRATIC

CUSTOMER

APPRAISER

VALUE

POWERS

➢ REWARD-COERCION➢ INFORMATION➢ EXPERT POWER➢ PROCESS POWER

CLIENT

Levy & Stuck (2005)

THE INFLUENCE OF CLIENTS ON VALUATIONS

2A COMPREHENSIVE APPROACH TO NPL RESOLUTION

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SOCIEDADES DE TASACION: SPANISH APPRAISAL SYSTEM

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METHODOLOGY

ECO 805/2003

AVM 2018 GUIDE BDE

ANEJO 9:CIRCULAR 4/2017

NPL ECB GUIDE

A COMPREHENSIVE APPROACH TO NPL RESOLUTION 4

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CERTIFICATION

RD 775/1997

SOCIEDADES DE TASACION

APPRAISERSCONTROLLERS

TECHNICAL RESOURCES: DATA BASES

HUMAN RESOURCES


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REPORTING

ECO 805/2003: REPORT TEMPLATE

TECHNICAL INSTRUCTIONS REPORTING BDE:

• HOUSING• LAND• AVM

CIRCULAR 3/1998:STATEMENTS

BANKS


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DATA BASESHOUSING

LAND

Rest of properties


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SAS, WPS

STATA

QGIS

TOOLKIT

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TOOLKIT: MASS APPRAISAL ANALYSIS


Residential - What information do we have?

Timeline 2014 2015 2016 2017 2018

Time of data 2013 2014 2015 2016 2017

Tasks

Pilot Exercise (8

appraisal

companies)

Pilot Exercise II

(38 appraisal

companies)

Supervisory exercise

(35 appraisal

companies)


(36 appraisal

companies)


(35 appraisal

companies)

Scope Residential (houses)

Number of elements

(individuals)345.574 874.645 728.016 873.602 1.023.507

Total value 50,8 Milliard€ 133.2 Milliard€ 110.6 Milliard€ 130.5 Milliard€ 162.8 Milliard€

Number of elements

(AVMs)- 2.016.835 4.084.065 4.579.893 1.573.683

Total value - 324.0 Milliard€ 418.9 Milliard€ 713.1 Milliard€ 197.7 Milliard€

Residential AppraisalDatabase

125 fields

Qualitative information:• AVM Model Data Sheet: characteristics, methodology, etc.• AVM Questionnaire sheet: performance and characteristics for each portfolio and entity.

Milliard = Billion

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PHASE III: Appraisals Comparison Statistical Analysis

PHASE II: Valuation Process Review

PHASE I: Data Quality Review


ST. 2

% valuationdifferences

ST. 1

ST. 3

% valuationdifferences per

Appraisal Company

Comparison of % valuation differencesof each appraisal company

Homogenous Areas


Residential - What do we do with this information?

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Land - What information do we have?

Timeline 2017 2018

Time of data 2016 2017

TasksPilot Exercise (36

appraisal companies)

Pilot Exercise II (35

appraisal companies)

Scope Land (all kinds) Land (all kinds)

Number of elements 144.224 161.775

Total value 80.048 Milliard€ 77.120 Milliard€

Appraisal file andLand file (64 fields)

2016 2017Kind of land Number Value % value Number Value % ValueVA7 Land: urban or developable 95.616 64.0 Milliard€ 80,94% 100.063 61.5Milliard€ 76,89%VA8 Land: Farms 26.771 7,0 Milliard€ 8,88% 35.751 8.2Milliard€ 10,26%VAX Land: Rural, rest 3.815 2,1 Milliard€ 2,69% 2.824 0,7 Milliard€ 0,82%VA9 Land: others 18.022 6,2 Milliard€ 7,50% 23.137 6.7 Milliard€ 8,37%

TOTAL 144.224 80.0 Milliard€ 161.775 77.1 Milliard€

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PRICES DISPERSION: MARKET HETEROGENEITY

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SOURCE: GACIC’S HOUSING APPRAISALS DATA BASE

Multifamily hoses' prices evolution: 2016/2015. Postal codes with more than 5 valuations

Prices evolution2016/2015

A COMPREHENSIVE APPROACH TO NPL RESOLUTION

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SUPERVISIONANALYSESMARKETS TRENDSMORTGAGE LENDING LTVNPL PROVISIONS

BANKSINSPECTIONS

BENCHMARKING

MACROPRUDENTIAL MICROPRUDENTIAL


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TRUST

FINANCIAL SYSTEM

INVESTORS

INSTITUTIONS

PUBLIC OPINION


NOMBRE DEL DEPARTAMENTO

“The best structure will not guarantee results and

performance. But the wrong structure is a guarantee of

non-performance” Peter Drucker

NOMBRE DEL DEPARTAMENTO

THANK YOU VERY MUCH

spanish mortgage collaterals appraisal system:...

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